Verizon Buying AOL for $4.4 Billion
It’s the way of all things: AOL, which owns several web-based media outlets including TechCrunch, Engadget, and Huffington Post, among others, is being acquired by Verizon for $4.4 billion in cash. The upshot here is that AOL will live on as a Verizon subsidiary, and it gives Verizon a new avenue to provide video content to its customers.
“Verizon’s acquisition further drives its LTE wireless video and OTT (over-the-top video) strategy,” the company explained in its statement Tuesday. It continued:
“AOL’s key assets include its subscription business; its premium portfolio of global content brands, including The Huffington Post, TechCrunch, Engadget, MAKERS and AOL.com, as well as its millennial-focused OTT, Emmy-nominated original video content; and its programmatic advertising platforms.”
A post on TechCrunch about the news points out that AOL still earns $182.6 million from its dial-up Internet subscription business—an impressive haul considering how outdated both AOL and dial-up Internet have been for quite some time. The post reasons that those folks might start to be transitioned into broadband accounts, which will obviously be a benefit to users and a benefit to Verizon’s bank account because of the higher prices of broadband subscriptions.
But that’s likely not the main motivation for the acquisition. Rather, it seems as though AOL’s video content is one of the big motivating factors, not to mention its advertising revenue. How this all fits into Verizon’s larger business strategy is anybody’s guess, though. I can’t really begin to imagine what Verizon has to gain with this acquisition in the long run, aside from it simply being another access-provider that has a bigger hand in also providing content.
It reminds me of Comcast, which owns NBC Universal, or Time Warner, which a few years ago used to own Warner Bros. and Time Warner Cable (and, interestingly, AOL). There’s a need among service providers to bundle access to content with ownership of the content itself, though what long term benefit that provides is tough to say. ISPs can sometimes use their content ownership to strong arm customers into signing up for access, or for more bargaining power with other access providers to run that content.
AOL’s current content, however, doesn’t seem like it’d provide quite as much benefit to Verizon—at least not in the same way that, say, Comcast’s ownership of NBC Universal does. Comcast could conceivably offer exclusive content to customers. What could AOL’s web content offer to Verizon customers that they couldn’t get otherwise?
Time will tell, I guess. For now, keep your eyes on AOL’s sites for whatever shakeups might be looming as a result of this acquisition.